Question 1

Select cost information for Klondike Corporation is as follows:   Based on this information:

Accepted Answer

A)  Both direct materials and rent expense are variable costs. 
B)  Direct materials is a fixed cost and rent expense is a variable cost. 
C)  Both direct materials and rent expense are fixed costs. 
D)  Direct materials is a variable cost and rent expense is a fixed cost. 
E)  Both direct materials and rent expense are mixed costs. 
A)  Both direct materials and rent expense are variable costs. 
B)  Direct materials is a fixed cost and rent expense is a variable cost. 
C)  Both direct materials and rent expense are fixed costs. 
D)  Direct materials is a variable cost and rent expense is a fixed cost. 
E)  Both direct materials and rent expense are mixed costs.

Question 2

Variable costs per unit increase proportionately with increases in volume of activity.

Accepted Answer

A) True 
 B)False

Question 3

There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.

Accepted Answer

A) True 
 B)False

Question 4

A firm provides the following sales data:
Expected unit sales.. 5,000 Unit variable cost….. $10
Unit selling price…. $16 Total fixed cost……. $12,000
Required:
(a) Calculate the break-even point in dollar sales.
(b) Calculate the margin of safety in dollar sales.

Accepted Answer

(a) Contribution margin ratio

Question 5

Use the following information to determine the margin of safety in dollars:

Accepted Answer

A)  $88,500. 
B)  $108,500. 
C)  $173,600. 
D)  $326,400. 
E)  $500,000. 
A)  $88,500. 
B)  $108,500. 
C)  $173,600. 
D)  $326,400. 
E)  $500,000.

Question 6

Cost-volume-profit analysis is used to predict future costs to be incurred, volumes of activity, sales to be made, and profit to be earned.

Accepted Answer

A) True 
 B)False

Question 7

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

Accepted Answer

A)  $1,900,000. 
B)  $2,800,000. 
C)  $1,300,000. 
D)  $1,100,000. 
E)  $1,700,000. 
A)  $1,900,000. 
B)  $2,800,000. 
C)  $1,300,000. 
D)  $1,100,000. 
E)  $1,700,000.

Question 8

When using the high-low method for estimating cost behavior, the slope, or variable cost per unit, is calculated by ________.

Accepted Answer

change in cost divid

Question 9

Scatter diagrams plot volume (units) on the vertical axis and cost on the horizontal axis.

Accepted Answer

A) True 
 B)False

Question 10

The sales level at which a company neither earns a profit nor incurs a loss is the:

Accepted Answer

A)  Relevant range. 
B)  Margin of safety. 
C)  Step-wise variable level. 
D)  Break-even point. 
E)  Contribution margin. 
A)  Relevant range. 
B)  Margin of safety. 
C)  Step-wise variable level. 
D)  Break-even point. 
E)  Contribution margin.

Question 11

Curvilinear costs always increase:

Accepted Answer

A)  With decreases in volume. 
B)  In constant proportion to changes in production levels. 
C)  When management performs break-even analysis. 
D)  When volume increases, but at a nonconstant rate. 
E)  On a per unit basis when volume of activity goes down. 
A)  With decreases in volume. 
B)  In constant proportion to changes in production levels. 
C)  When management performs break-even analysis. 
D)  When volume increases, but at a nonconstant rate. 
E)  On a per unit basis when volume of activity goes down.

Question 12

Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,500,000, calculate the firm's break-even point in total sales dollars.

Accepted Answer

A)  $13,250,000. 
B)  $13,000,000. 
C)  $12,750,000. 
D)  $12,900,050. 
E)  $12,750,625. 
A)  $13,250,000. 
B)  $13,000,000. 
C)  $12,750,000. 
D)  $12,900,050. 
E)  $12,750,625.

Question 13

While the total amount of fixed cost remains constant with the level of production, fixed cost per unit changes as volume changes.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following statements is not true?

Accepted Answer

A)  Total fixed costs remain the same regardless of volume within the relevant range. 
B)  Total variable costs change with volume. 
C)  Total variable costs decrease as the volume increases. 
D)  Fixed costs per unit increase as the volume decreases. 
E)  Variable costs per unit remain the same regardless of the volume. 
A)  Total fixed costs remain the same regardless of volume within the relevant range. 
B)  Total variable costs change with volume. 
C)  Total variable costs decrease as the volume increases. 
D)  Fixed costs per unit increase as the volume decreases. 
E)  Variable costs per unit remain the same regardless of the volume.

Question 15

Which of the following costs are most likely to be classified as fixed?

Accepted Answer

A)  Shipping costs 
B)  Sales commissions 
C)  Direct labor 
D)  Direct materials 
E)  Property taxes 
A)  Shipping costs 
B)  Sales commissions 
C)  Direct labor 
D)  Direct materials 
E)  Property taxes

Question 16

The excess of expected sales over the sales level at the break-even point is known as the:

Accepted Answer

A)  Sales turnover. 
B)  Profit margin. 
C)  Contribution margin. 
D)  Relevant range. 
E)  Margin of safety. 
A)  Sales turnover. 
B)  Profit margin. 
C)  Contribution margin. 
D)  Relevant range. 
E)  Margin of safety.

Question 17

Under absorption costing, fixed overhead costs are excluded from product costs.

Accepted Answer

A) True 
 B)False

Question 18

There are at least three different methods to separate costs into fixed and variable. These methods are the ________, ________, and ________ methods.

Accepted Answer

scatter diagram; hig

Question 19

Cost-volume-profit analysis can be used to compute expected income from predicted sales and cost levels.

Accepted Answer

A) True 
 B)False

Question 20

Use the following information to determine the break-even point in sales dollars:

Accepted Answer

A)  $88,500. 
B)  $108,500. 
C)  $173,600. 
D)  $326,400. 
E)  $500,000. 
A)  $88,500. 
B)  $108,500. 
C)  $173,600. 
D)  $326,400. 
E)  $500,000.

Select cost information for Klondike Corporation is as follows: Based on this information:

Variable costs per unit increase proportionately with increases in volume of activity.

There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.

A firm provides the following sales data: Expected unit sales.. 5,000 Unit variable cost….. $10 Unit selling price…. $16 Total fixed cost……. $12,000 Required: (a) Calculate the break-even point in dollar sales. (b) Calculate the margin of safety in dollar sales.

Use the following information to determine the margin of safety in dollars:

Cost-volume-profit analysis is used to predict future costs to be incurred, volumes of activity, sales to be made, and profit to be earned.

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

When using the high-low method for estimating cost behavior, the slope, or variable cost per unit, is calculated by ________.

Scatter diagrams plot volume (units) on the vertical axis and cost on the horizontal axis.

The sales level at which a company neither earns a profit nor incurs a loss is the:

Curvilinear costs always increase:

While the total amount of fixed cost remains constant with the level of production, fixed cost per unit changes as volume changes.

Which one of the following statements is not true?

Which of the following costs are most likely to be classified as fixed?

The excess of expected sales over the sales level at the break-even point is known as the:

Under absorption costing, fixed overhead costs are excluded from product costs.

There are at least three different methods to separate costs into fixed and variable. These methods are the , , and methods.

Cost-volume-profit analysis can be used to compute expected income from predicted sales and cost levels.

Use the following information to determine the break-even point in sales dollars:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters

Exam 5: Cost Behavior Cost-Volume-Profit Analysis

Select cost information for Klondike Corporation is as follows: Based on this information:

Variable costs per unit increase proportionately with increases in volume of activity.

There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.

A firm provides the following sales data: Expected unit sales.. 5,000 Unit variable cost….. $10 Unit selling price…. $16 Total fixed cost……. $12,000 Required: (a) Calculate the break-even point in dollar sales. (b) Calculate the margin of safety in dollar sales.

Use the following information to determine the margin of safety in dollars:

Cost-volume-profit analysis is used to predict future costs to be incurred, volumes of activity, sales to be made, and profit to be earned.

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

When using the high-low method for estimating cost behavior, the slope, or variable cost per unit, is calculated by ________.

Scatter diagrams plot volume (units) on the vertical axis and cost on the horizontal axis.

The sales level at which a company neither earns a profit nor incurs a loss is the:

Curvilinear costs always increase:

While the total amount of fixed cost remains constant with the level of production, fixed cost per unit changes as volume changes.

Which one of the following statements is not true?

Which of the following costs are most likely to be classified as fixed?

The excess of expected sales over the sales level at the break-even point is known as the:

Under absorption costing, fixed overhead costs are excluded from product costs.

There are at least three different methods to separate costs into fixed and variable. These methods are the ________, ________, and ________ methods.

Cost-volume-profit analysis can be used to compute expected income from predicted sales and cost levels.

Use the following information to determine the break-even point in sales dollars:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters

There are at least three different methods to separate costs into fixed and variable. These methods are the , , and methods.